Datalite UK Ltd supplies picture frames and personalised gifts, and much of its early business was via eBay.  In fact eBay provided virtually instant access to a huge marketplace of sellers, and this enabled the company to achieve the coveted Power Seller status with 100% positive feedback.  Around the year 2005 several thousand pounds of business each month was through eBay sales, fast forward to May 2010 after a steady period of deliberately reducing items available for sale on eBay, a decision was made to finally pull the plug on using eBay as a selling outlet.   This article highlights the advantages and disadvantages to using eBay to sell, and concludes that eBay has in recent years forgotten who its true customers are (sellers; buyers are sellers’ customers) and in the process has apparently become a hostile sellers environment. 

Ebay is an online auction facility, the biggest and most well know.  A simple but effective idea: sellers place online auctions, and pay a cut if an item sells and an advertising fee whether an item sells or not.  eBay wins either way.  Various get rich quick schemes have evolved claiming that one can make a fortune selling on eBay; but if this really was the case why share the information?  

For a new up and coming business with minimal or no web presence, eBay is tempting with a ready made portfolio of millions of potential targeted customers.  From a buyer’s perspective it can be a tremendous resource, and there are many bargains to be made.  However, does eBay provide a viable sellers platform?  In the author’s view eBay used to, but believes eBay has developed into a bureaucratic monster distinctly hostile to sellers.  Currently eBay is unviable for many sellers. 

Datalite’s own experience a few years ago, showed that eBay was initially a useful forum for developing presence, tapping into virtually instant customers.  An early lesson was to be aware of the creep of additional expenses and to continually watch the bottom line.  It is very, very easy to sell on eBay and lose money through series of selling transactions.  Largerly down to eBay fees and additional costs.  This can appear unintuitive – what difference does a few percent commission make?   

It is the cumulative cost effect of such items as cost of stock, delivery of stock, VAT, postage/courier, cost of packaging materials, VAT on postage (if you are a UK VAT registered business this needs to be charged even for Royal Mail VAT free items!), stationery, eBay advertising fees – including items that do no sell, eBay final value fee, and finance fees such as Paypal.  The cumulative effect of this lot can be a nasty surprise if sums are not right. All those tempting Best Offers and Low Auction starts can end up tipping the balance to making a loss, not good for business where the aim of the game of course is to make a reasonable profit.  Another consideration is time, eBay tends to result in far more queries and indeed bureaucracy compared to the norm of running a well designed website with automatic shopping cart.  To quote the old adage ‘time is money’ – time spent on eBay administration needs to be firmly factored in to business calculations. 

Datalite found in recent years eBay was evolving into providing a distinctly poorer deal for sellers.  Fees were hiked to the point that eBay was taking the best part of a 10 per cent cut from the selling fee.  Again this may not seem a lot, but in conjunction with all the other charges and costs this can mean the difference between making a profit or loss.  The nature of eBay is there is a fair amount of administrative management required.  Buyers ask lots of questions and there are always the odd (literally) unreasonable buyer’s to contend with  (i.e. late/non payers, false claims of non receipt, reporting damage which hasn’t occurred etc.).  eBay’s original two way feedback system helped to keep buyer/seller transactions on a fairly even keel.  This all changed with a dramatic change in 2008 which blocked sellers from leaving neutral or negative feedback for buyers, and counting neutral feedback received from buyers as a negative. 

The decision to alter the feedback system to effectively neuter sellers from being able to leave honest feedback for buyers had a dramatic impact.  Datalite UK Ltd had 100% feedback based from thousands of customers under the old system, but now found that eBay had made a decision where unreasonable customers could hold a seller to ransom.  Immediate examples include buyers leaving it until the tenth day to pay – this is the day a seller can file a late payer report.  The minimum feedback a seller can leave is POSITIVE.  A vindictive buyer could leave NEGATIVE feedback complaining goods took over ten days to receive despite the seller promptly despatching goods following late payment.  Some buyers were known to ask for extras additional to the described item (courier delivery instead of royal mail, additional accessories) implying that they would leave NEGATIVE feedback if this did not happen.  Worse was apparent from other sellers, some unscrupulous buyers were instigating false claims of non-receipt or transit damage on the implied threat of leaving negative feedback, knowing that the seller can do nothing but leave good POSITIVE feedback. 

eBay clearly had rapidly become a hostile sellers environment, and in the process appears to have forgotten the salient truism that its actual paying customers were sellers; buyers were in fact customers of sellers. 

Datalite UK Ltd had enough of this, and reached the decision to discontinue selling through eBay.  Its eBay Shop has been closed and all former items (at times hundreds) withdrawn from eBay sale, albeit of course available through other outlets such as their own websites. 

The immediate effect of discontinuing eBay was an instant reduction in dealing with administrative bureaucracy.   Another apparent advantage was an improvement in the financial bottom line, discontinuing eBay led to the discovery that in many instances Datalite was competing with itself –customers were choosing the inevitably cheaper eBay prices than from the website.  By the time all eBays fees, average lower selling price, time spent, bureaucracy, and feedback system hostile to sellers are factored in; the sad conclusion was reached that eBay currently offers a poor deal for most sellers.  One cannot help thinking about the old adage of killing the golden goose that laid the golden eggs!